Your First Home scheme: cheaper each month, but cheaper overall?

If you sell a £300,000 new-build bought through Your First Home after 10 years and prices rose 2% a year, the scheme is £2,785 cheaper in total than a 95% mortgage. At 3% a year it is £4,711 dearer. The monthly figure is the one GOV.UK prints: £1,248 for the first five years against £1,530, both at 5% over 30 years. So what turns a cheaper month into a dearer total? It is the repayment: you give back 20% of the home's value when you sell, and when prices rise that is more than the £60,000 you borrowed. At 2% a year growth the scheme costs more from a sale in year 13.

• The monthly saving falls from £282 to £207 in year 6, when the loan's interest starts at 1.5%, and to £132 from year 7, when it rises to 3%.
• The loan's interest comes to £8,100 by year 10 and £35,100 by year 25. None of it reduces what you owe.
• If prices fall 2% a year, the scheme is £26,900 cheaper at year 10, because the 20% falls with the value. Clearing the loan at year 5 after that fall would take a new mortgage of 98.7% of the home's value, against the 96.5% a 95% buyer still owes.

Keep in mind these are our own calculations, worked out on the engine behind our UK mortgage calculator: GOV.UK's £300,000 example, 30-year repayment mortgages at 5% on both routes, the loan's interest as GOV.UK illustrates it and no fees on either side. Not all the rules are published yet. GOV.UK says the full eligibility rules and repayment guidance come before applications open, and the scheme is "expected to open for applications in February 2027".

How does the Your First Home scheme work?

You buy a new-build home in England as a first-time buyer with a deposit of at least 2.5%, a government equity loan worth 20% of the price and a repayment mortgage from a participating lender.

GOV.UK prints only the pounds, so the 77.5% is our own sum: £232,500 ÷ £300,000.

The loan is interest free for five years, then 1.5% in year 6 and 3% from year 7. You pay the interest separately from your mortgage, and the payments "do not reduce the amount of equity loan you owe". The pounds are in the interest section below. You own the home from the day you complete, and the government is not a joint owner or your landlord.

By the way, it is a different scheme from the older First Homes discount and from Help to Buy, and the questions at the end say how each one differs.

Your First Home scheme price cap and income cap

You will normally need a household income of £110,000 or less outside London and £140,000 or less in London. The price must sit within the cap for the home's local authority area. GOV.UK lists 296 area caps, where you can find the cap for your area. The Budget says caps are "set based on local authority median prices" and sets £650,000 for inner London and £500,000 for outer London. Three examples, in Newcastle upon Tyne, Birmingham and Croydon:

Price caps come from GOV.UK's price cap table, income caps from the scheme guidance. The Budget puts the maximum deposit at 15%. GOV.UK has not published how the loan or the mortgage changes with a bigger deposit.

How much you borrow from a lender

On GOV.UK's £300,000 example you need a £232,500 mortgage and a £7,500 deposit, against "a £15,000 deposit and a £285,000 mortgage" with a standard 95% mortgage. That is £52,500 less to borrow from a lender and £7,500 less to save. The £60,000 equity loan comes on top, so in all you borrow £292,500 against £285,000.

GOV.UK says that "As with any mortgage, participating lenders will carry out affordability and credit checks before making a lending decision". The guidance gives no income multiple or other borrowing rule.

Your First Home scheme interest rate: what years 6 and 7 cost in pounds

So what do 1.5% and 3% mean in pounds? On GOV.UK's £300,000 example our engine puts the loan's interest at £900 by the end of year 6 and £35,100 by the end of year 25.

None of this pays off any of the £60,000 loan. Year 6 costs £900 (£75 a month) and each year from year 7 costs £1,800 (£150 a month). With the mortgage added, the month looks like this:

The payments are GOV.UK's monthly figures, in whole pounds, and the saving is one minus the other. Our engine gives the same, and the saving to the penny is £281.83, £206.83 and £131.83.

GOV.UK's £75 and £150 are 1.5% and 3% of the original £60,000, but it has published no rule on what the interest is charged on, or on whether 3% stays fixed. The Budget says only "a gradual increase after five years". This article keeps 3% on the original loan for every year from year 7, as GOV.UK's illustration does.

The older Help to Buy loan works differently: its rate rises every April by an inflation-linked amount, CPI plus 2%, or RPI plus 1% for loans from the earlier 2013 to 2021 scheme. GOV.UK has published no such rule for Your First Home.

The Budget says buyers "could save hundreds of pounds per month compared with a standard mortgage". Does it add up? On GOV.UK's example it does in years 1 to 5 (£282) and it does not from year 7 (£132). At the Newcastle upon Tyne cap our engine puts the years 1 to 5 saving at £249.

Is Your First Home cheaper overall? It depends on when you sell

What you repay on the equity loan

You normally repay 20% of the home's value when you sell, based on an independent valuation, and the amount you borrowed does not come into it. You can also repay some or all of it before selling. GOV.UK gives two cases for the £300,000 home. Let's say it is valued at £320,000: you repay £64,000. Valued at £280,000, you repay £56,000, because "the government shares both increases and decreases in the value of your home".

The total cost, by the year you sell

Our engine adds up what each route costs until the sale:

Total cost to the sale = deposit + mortgage payments + equity loan interest + mortgage still owed + 20% of the value (scheme only)

The sale price is the same on both routes, so it drops out. To be honest, this treats both routes as open to you, and they may not be. GOV.UK says the scheme "is designed for first-time buyers purchasing a new-build home in England who would struggle to buy without assistance", and the Budget that it is for first-time buyers "who would not otherwise be in a position to purchase a residential property". GOV.UK has not published how, or whether, that will be tested: the full eligibility rules come "before applications open". The 95% route is GOV.UK's own comparison, and a lender's affordability checks apply to either, as in the borrowing section above.

The table gives the scheme's total minus the 95% route's, by how much prices change a year and the year you sell.

Two rows worked through. At year 10 and 2% growth the scheme comes to £427,633 against £430,418. At year 10 with prices falling 2% a year it comes to £403,518 against £430,418, and the 20% repaid is £49,024 instead of £60,000. The falling rows are arithmetic, the same as the rising ones, and neither is a forecast.

The sale year from which it costs more

Why does it flip? Because the monthly saving is fixed in pounds, while the 20% moves with the price every year. The longer you stay and the faster prices rise, the more the repayment outgrows the saving. A fall works the other way and makes the scheme cheaper still.

These figures run to year 25. The 30 years is the mortgage term in GOV.UK's illustration, and GOV.UK has published no term or end date for the equity loan.

Paying off the equity loan at year 5

GOV.UK says you will be able to repay some or all of the loan before selling. Repaying all of it at the end of year 5, before the interest starts, means a bigger mortgage. Our engine's figures for the £300,000 home:

LTV is the new loan as a share of the home's value. The loan needed is the £213,502 still owed on the scheme mortgage plus 20% of the value: £54,235 at -2%, £60,000 at 0% and £72,999 at 4%. After a fall the 20% shrinks, but so does the home, so the new loan is a larger share of the home than the 95% buyer owes, at every growth rate in the table. That is arithmetic: it does not say what a lender would offer.

GOV.UK has not yet published minimum repayment amounts, valuation rules, any fees for repaying or how repayment works when you remortgage; the full list is below. You can check the year-5 balance on our UK mortgage calculator with a 5-year initial fixed period. If your fix ends at the same time, the new rate changes the payment too: see what happens when your fix ends.

A lower mortgage rate, or a 10% deposit instead

GOV.UK prices both mortgages at 5%. Change the rates, or compare with a 10% deposit, and the numbers move quite a lot: the break-even growth for a year-10 sale goes anywhere from 1.42% to 4.13%. Our engine's figures for the £300,000 home:

• The Both 5% row is GOV.UK's example.
• In the Scheme 4.5% row the scheme mortgage is half a point cheaper and the 95% mortgage is at 5%. This is our assumption. Half a point is a little wider than the October 2026 gaps between the 95% band and the 85% and 75% bands, 0.41 and 0.49 points. The saving is £351.90 a month.
• The BoE rates row uses the Bank of England's October 2026 2-year fixed rates, 5.47% for the 85% band and 5.88% for the 95% band, held for 30 years. That is also our assumption, since they are 2-year fixes. The saving is £371.06 a month. GOV.UK does not say which band a 77.5% mortgage will be priced in.
• The 10% deposit row sets the scheme against a 90% mortgage at 5%, with £30,000 down instead of £7,500 and £1,449.42 a month. The scheme saves £51 a month from year 7. At 0% growth it costs more from a sale in year 24.

What GOV.UK has not published yet

GOV.UK says these come "before applications open":

• the full eligibility rules;
• minimum repayment amounts;
• valuation requirements;
• any fees for repaying the loan (GOV.UK does publish the fees developers pay to take part: 1%, 3% and 4% of the final sale price, by how many homes they sell);
• how repayment works when you sell or remortgage;
• how interest payments will be collected;
• which homes, developers and lenders take part.

Not stated on any GOV.UK page we read on 6 November 2026:

• whether a buyer who could buy with a standard mortgage can use the scheme;
• whether 3% from year 7 is fixed or indexed;
• what the interest is charged on;
• the equity loan's term or end date;
• the rate lenders will offer on the mortgage;
• how the loan sizes with a deposit above 2.5%.

On both routes the comparison leaves out fees, Stamp Duty, moving and sale costs, insurance, any return on the extra £7,500 a 95% buyer puts down and rate changes after a fix.

Run the Your First Home numbers for your own price

At the price cap in each of the three areas, our engine gives:

At 0% growth the scheme is cheaper for a year-10 sale by £14,067 in Newcastle upon Tyne, £16,721 in Birmingham and £26,541 in Croydon. In terms of the break-even, the price makes no difference: every input is a fixed share of the price, so at equal rates the break-even growth rates and sale years above are the same in every area.

Following GOV.UK's £300,000 illustration (£75 and £150 a month on £60,000), the loan's interest from year 6 and from year 7 is £66.25 and £132.50 a month in Newcastle upon Tyne, £78.75 and £157.50 in Birmingham and £125 and £250 in Croydon.

Our UK mortgage calculator has no Your First Home mode, so basically it gives you the mortgage part and you add the loan's interest yourself. It is free, with no sign-up.

1. Enter your price and 22.5% as the Deposit (your 2.5% plus the 20% loan). The result is the scheme mortgage.
2. Run it again with a 5% deposit for the 95% route.
3. Add 20% of the price × 1.5% ÷ 12 a month for year 6 and 20% of the price × 3% ÷ 12 from year 7. That follows GOV.UK's £300,000 illustration; GOV.UK has not published what the interest is charged on.
4. Enter 5 years as the Initial fixed period to see the balance at year 5, which you need for the year-5 exit above.

Rightmove's Your First Home scheme calculator checks eligibility and compares the scheme with a standard mortgage, from household income, deposit, region and area. HomeOwners Alliance's guide has an eligibility calculator.

Questions people ask about the Your First Home scheme

Is the Your First Home scheme worth it?

It depends on when you sell and what prices do. On GOV.UK's £300,000 example at 5% it costs £282 a month less than a 95% mortgage for five years. By our engine, for a sale at year 10 it is cheaper overall if prices rise less than 2.38% a year, and cheaper still if they fall. GOV.UK says it is for buyers "who would struggle to buy without assistance" and has not published how, or whether, that will be tested. The total cost section above gives the figures by sale year.

Is Your First Home the same as the First Homes scheme?

No. First Homes sells a home for 30% to 50% below its market value, with an income limit of £80,000 (£90,000 in London). When you sell, you can usually only sell to an eligible buyer at the same percentage discount; if the council lets you sell on the open market, you give it that percentage of the sale price. Your First Home is a 20% equity loan you repay at 20% of the home's value.

How is Your First Home different from Help to Buy?

Both are government equity loans with five interest-free years. Help to Buy charges 1.75% in year 6, rising every April by CPI plus 2% (RPI plus 1% for the 2013 to 2021 scheme) with a £1 monthly fee. It is closed to new applications in England. Your First Home charges 1.5% in year 6 and 3% from year 7 and has a household income cap of £110,000 (£140,000 in London); GOV.UK has not published whether its rate rises, any repayment fees or a loan term.

When does the Your First Home scheme start, and how do I apply?

Applications are not open yet. GOV.UK plans pre-registration and guidance by the end of December 2026, the first applications in February 2027 and the first sales in April 2027. Pre-registering "will not commit you to purchasing through the scheme, but will provide further information on your eligibility for the scheme and price caps applicable in your area". You need a mortgage from a participating lender, and the developers and lenders taking part are not yet published.

What is the Your First Home scheme income limit?

Total household income of £110,000 or less outside London and £140,000 or less in London; the full eligibility rules are not published yet. The home must be a new-build in England, so the scheme does not cover Scotland, Wales or Northern Ireland.